Quote:
Originally Posted by ranchlandsselling
3.90% for three years blended with 3.29% (likely the best his bank is offering) for two years with the penalty blended into the rate is less than the 3.90% they're offering you. They're charging you the penatly either way. It's just blended into the rate.
Do the math on what your payments would be at current rates plus the penalty vs. your current mortgage vs. what they're offering you and see which one works out best. I don't have time to get into this more but feel free to PM me.
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That's a pretty good calculation there considering you have no idea what the actual interest owing is and the principle of the remaining mortgage.
Under some circumstances he will save by simply breaking the morgage. Depends on the rate he can get and how much is left on the mortgate.
My girlfrien's parents were paying 3.9% with 2 years left. They had 400k left on the mortgage, and were able to get a 2.99% fixed 5 year. I advised them to pay the penalty and pay the fee, as in this case it was a no brainer.
Whether or not you should pay the penalty should be based on a calculation dependent on your specific situation.